The Federal Trade Commission (FTC) announced Monday morning it will charge Epic Games with a $520 million settlement over charges related to children’s privacy. Epic Games, which makes popular all-ages games like “Fortnite” and “Fall Guys,” allegedly violated the Children’s Online Privacy Protection Act (COPPA) by deploying “design tricks, known as dark patterns, to dupe millions of players into making unintentional purchases,” the FTC said in a press release.
The $520 million payment is divided into two settlements: the COPPA fine amounts to $275 million, which is the largest ever penalty for violating an FTC rule. The FTC also proposed that Epic should pay $245 million to refund customers for what it calls “dark patterns and billing practices.” If Epic Games pays that fine, it will be the FTC’s largest eve refund amount in a gaming case.
In addition to making it too easy for children to make online purchases, the FTC also took issue with Epic’s live text and voice communication features, which were set to be turned on by default. The FTC claims that children were exposed to harassment and abuse because of these features, especially since Epic had no way of making sure that children and adults would not be matched together in online play. According to the FTC’s press release, children have been exposed to bullying, threats, harassment and “psychologically traumatizing issues such as suicide” while playing the game.
In the last two years, Epic has raised over $3 billion in venture capital, most recently at a $31.5 billion valuation. Along with Lego, whose parent company invested $1 billion, Epic Games is working on building a kid-friendly metaverse.
Epic Games has also been embroiled in a lawsuit with Apple, accusing the tech giant of anti-competitive behavior. The video game company challenged Apple’s policy that it can remove products from the iOS App Store if the app reroutes customers around paying within the app, which gives Apple a 30% cut.